By Elizabeth Yellen
Special to Inside
The Internet bubble may have burst and the U.S. may still be suffering the effects of the Sept. 11, 2001, terrorist attacks and ensuing wars and recession, but the Chicago real estate market has not entirely collapsed. Gentrification and development of the city continue, and people are still looking to purchase homes.
There are also still people earning enough money to buy homes priced in the seven figures—and they do. But the value of $1 million differs greatly among Chicago neighborhoods. Seekers of $1 million homes "are specific buyers," says Edward Schwind, broker/owner of Schwind Realty and Development. He estimates that after the typical 20 percent down payment —$200,000 in this case —a household would need to earn approximately $175,000 a year in order to pay off a 30-year $800,000 mortgage.
Anna Robertson, senior vice president, sales for Jameson Realty Group, says that purchasers of the $1 million-plus properties are often—but not always, of course—couples in their mid-40s. Both members of the couple generally work in such professional fields as law, accounting and banking, have two to three children, and opt to live in the city because they can afford to. It is also not uncommon for such people to buy with cash offers and mortgage contingencies.
Although a $1 million home is out of reach for the majority of the population, in a neighborhood such as Lincoln Park this sum is no longer considered exorbitant, says Ted Kamberos, president of Kamberos Associates. He has observed that while two or three years ago people would be surprised to hear that a house sold for this sum, this reaction is no longer the norm. He sells numerous properties for this amount, and even goes so far as to say that "$1 million doesn't buy you what it used to" in Lincoln Park. He explains this trend by the fact that in Lincoln Park the real estate market is "not as drastically affected as some outlying neighborhoods" because of the area's desirability.
Nevertheless, Kamberos cautions against viewing the $1 million figure lightly. "It's still a lot of money," he says. And indeed, those who spend that sum can sometimes expect quite a lot: a renovated single-family house measuring 4500-5000 sq. ft. with three or four bedrooms, two and one-half bathrooms, decks, a modern kitchen, and a garage holding two to two and one-half cars.
In Robertson's experience, in Lincoln Park $1 million will more often buy a row house or a town house, not a single-family home. A row house is defined as a brownstone attached to another brownstone, while a town house is "a complex with a number of [homes] all built and planned at the same time." She cites The Pointe, located at the intersection of Lincoln Ave., Sedgwick St. and Dickens Ave., as an example of townhouses. There, she says, units range in size from 1800 or 2000 sq. ft. up to 4000 sq. ft.; include two, three or four bedrooms; and cost from $500,000-$1.3 million.
According to Robertson, price is dictated by a building's square footage, its age and the quality of amenities such as appliances and finishes. For example, granite countertops, wood cabinets, hardwood floors and Jacuzzis are just some components of a "desirable package that commands higher prices," she says. In addition, the size of the surrounding lot will affect price. A lot larger than the standard city lot size of 25 ft. by 125 ft. costs more than the standard.
As in Lincoln Park, in Gold Coast $1 million properties are not unusual. There, however, potential purchasers must expect less living space. According to Laurie Popovich, associate broker/GRI with Rubloff Residential Properties, an example of what this sum could buy is a "prime" two-bedroom/three and one-half bathroom condominium at 950 N. Michigan Ave., which was constructed in 1984. The "prime" units have views of Lake Michigan from every room and might measure 1860 sq. ft.; are furnished; and sport granite and marble surfaces. Another Gold Coast property in this price range is a condo that measures 2000 sq. ft., has three bedrooms and two bathrooms, and boasts "views, views, views," she says.
Although $1 million may not buy a lot of living space in Gold Coast—under 2000 sq. ft. or so—Popovich emphasizes that the money buys comfort. She says that the condominiums in this price range are in "full-service luxury buildings" that house indoor pools, exercise rooms, party rooms, and concierges. The condos also contain such top-of-the-line amenities as mosaic tiles, slate floors, cherry cabinets, granite countertops and so-called floating sinks, which look as if they are emerging from the wall.
It is no secret that the farther north and west one travels, the more real estate prices drop. In fact, according to Terri Fuller, a real estate consultant in the Irving Park office of Coldwell Banker Residential Brokerage, $1 million properties are uncommon in such neighborhoods as Ravenswood. There, she says, it is possible to buy "something pretty good" that contains a "biggish lot and good [living] space" for the high $500,000s to $700,000. She says that in Ravenswood $1 million will buy a brand-new construction or a home that has been gut rehabbed or restored to its original vintage construction. Such a home might measure up to 3500 or 4000 sq. ft.
Fuller says that Bucktown is a bit pricier than Ravenswood, and that there $1 million will fund a new construction on a smaller and perhaps shorter lot—perhaps the standard city size. She adds that the expensive Bucktown properties are typically built new after teardowns; rehabs are rare.
In Lincoln Square, Tom Rice, assistant team leader at Keller Williams Fox and Associates, says that the proliferation of the $1 million home is a relatively recent phenomenon and that the typical price for a single-family house ranges from $400,000-$600,000. His office does not carry many listings for $1 million, partly because developers, wary of the shaky economy, are trying to keep their costs down. Nevertheless, he says, the number of Lincoln Square properties going on the market for $1 million has doubled since 1996. He therefore predicts that the $1 million home "is coming this way" because the "push has been northward and northwestward for years."
Explaining the appreciation of Lincoln Square real estate, Rice recalls a "fixer-upper" whose list price was $159,900 in the late 1990s and which sold three years later for $400,000. He attributes this escalation partly to the establishment of a Starbucks nearby; to him, Starbucks is the barometer of a neighborhood's success: "When Starbucks appears, the neighborhood has arrived," he says.
Reviewing a sampling of Lincoln Square properties that have sold for approximately $1 million in the last few years, Rice finds the following: a 1921, renovated colonial-style brick house on a 60 ft. by 125 ft. lot with a two-car garage on Sunnyside; and a 12-room, four-bedroom, three-bathroom house on Windsor Ave. Currently listed at $1,499,000 is an 1894 Queen Anne, measuring over 4000 sq. ft. with beveled and stained glass windows, two decks and a wraparound porch on Windsor Ave.
Farther north, in Edgewater and Andersonville, there are few properties priced in the $1 million range, says Schwind. Such properties would be single-family homes, as there are few condos and townhouses in those areas in that price range. According to Schwind, while there are million-dollar single-family homes built on larger lots and containing four to six bedrooms and three bathrooms, "that's probably pricey for that area." Instead, what a buyer will find is that the newer structures or gut rehabs will cost in the $700,000-$800,000 range, he says.
A representative $1 million property there is a mansion compared to a Gold Coast home of the same price: one house Schwind cites on Lakewood Ave. is an 1898 restored vintage structure; sits on a 50 ft. by 125 ft. lot; measures 4200 sq. ft.; and contains six bedrooms and three and one-half bathrooms.
As many people already know, the current real estate market belongs to the buyers. Nowadays buyers have many choices in terms of both product and location, so they "want more for less," says Robertson. Sellers face more competition and find themselves with their properties on the market for longer periods of time.
"We've taken a hit from 9/11," says Popovich. "Everything is off." However, this does not mean that expensive properties are not selling. Rather, "things take about twice as long to sell," she explains. Rice paints a more vivid contrast: he says that since 1977, when he began to work full-time in the real estate industry, "the Clinton economy was the best I ever saw." During that period, he says, sellers usually fielded several offers and eventually sold for higher than their list price.
The weather has also impacted the sale of real estate, says Schwind. He has observed that in bad weather people are less inclined to go out and house hunt. Even so, demand for $1 million-plus properties remains "pretty good," says Robertson. She notes that the markets currently seeing the most activity are on the lower—that is, between $250,000 and $300,000—and upper ends, but that the middle market is somewhat slower because people generally buy into the middle range when transitioning from starter homes. It is typically more difficult to qualify to purchase in this in-between stage.
Furthermore, observes Schwind, Chicago has an overabundance of condominiums in the middle range, between $350,000 and $400,000. More people qualify to buy cheaper units than these units. He predicts that buyers will soon see prices leveling off, not increasing as they did over the past five years or so. This is not necessarily to say that prices will fall unjustifiably, he points out, but that sellers and developers will realize that prices have been too high, so the prices will now land where they belong.
Beer Frame inaugural fundraiser
Join members of the community for the Lincoln Square Foundation's inaugural fundraiser at 8 p.m. Friday, June 13, in Lincoln Square Lanes, 4874 N. Lincoln Ave., above Ace Hardware. The $25 donation brings fun for all ages: free bowling, free pizza, door prizes, cash bar. Call (773) 728-3890 to RSVP. The Lincoln Square Foundation will support educational, cultural and social enrichment activities in Lincoln Square. |
